Penneo: '25e FCF break-even increasingly de-risked - ABG

Strong implied Q4 to meet raised FY'24 guidance is achievable
Clear profitability focus: cutting '24e-'26e ARR, raising EBITDA
We expect FCF break-even in '25e: FVR to DKK 7-13 (6-14)


The strong Q4 to meet raised FY'24 guidance is achievable

Penneo grew ARR by 18% y-o-y in Q3 (below ABGSCe at 19.5%), with a solid 15% contribution from new sales weighed down by a softer-than-expected uplift of 8%. Churn was 5%, roughly in line with recent quarters. Revenue growth of just 7% disappointed, burdened by compensation for a few large KYC clients, thereby pushing Q3 adj. EBITDA of DKK -2.0m below our DKK 0.6m estimate despite lower opex. The raised guidance implies Q4 adj. EBITDA of DKK 14m-19m vs. the historical maximum of DKK 9m, but we still view it as realistic (ABGSCe DKK 16m). With only ~1.5 months left of '24e, Penneo will also be helped by a favourable seasonality effect in Q4 and the highly probable ARR recognition of a large German client.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/penneo/Equity-research/2024/11/penneo---25e-fcf-break-even-increasingly-de-risked/